R&K Blog
A general contractor was hired to construct dormitories at a university. A cold Northeast winter filled with lots of precipitation exposed a defective window system that was letting moisture into the building. Mold was discovered and faulty installation was determined to be the primary cause of the issue. The contractor had hired a subcontractor to install the window system, and the subcontractor had gone out of business. Therefore, the general contractor and the window manufacturer were responsible for paying for the incident. Because the general contractor did not have pollution coverage, the result was very costly.
There are plenty of these stories with similar incidents and outcomes. Many contractors assume that their general liability (GL) policy covers all “third party stuff” including third-party injury and property damage. However, many GL policies contain a pollution exclusion which excludes bodily injury or property damage that arises from the release of a pollutant. Also, GL policies do not cover the costs of pollutant clean-up or remediation which can be quite costly if there is a pollution event.
A carrier may try to sell jobsite pollution coverage extensions, but these are missing important components such as insuring agreements for contamination-caused issues and cleanup costs. Contractors pollution liability insurance (CPL) is a specific type of environmental insurance for contractors. It is available to any type of contractor performing operations or conducting work.
CPL policies can be offered on both a project or blanket program basis. A project policy provides coverage for operations performed during the construction period with “tail” coverage for an extended reporting period (ERP). A blanket program provides coverage on an annual basis for all defined covered operations.
According to the International Risk Management Institute, Inc. (IRMI), it can be confusing for general contractors on which types of construction activities or operations require CPL insurance for contracts. Below is a helpful guideline that they’ve put together to determine which activities have a high, medium or low risk of hazard. Of course, keep in mind that any activity can create environmental liability. The team at Rose & Kiernan, Inc. is also here to help you make this important business insurance decisions.
For more information on contractors pollution liability insurance (CPL), please contact Rose & Kiernan, Inc. here or by calling 800-242-2433.